Analysts cautious on plan to set up commodities mart

MANILA, Philippines - Commodity trading in the country may be feasible, but the Philippine Stock Exchange (PSE) will need to do a lot of work to make it successful, analysts said. Reacting to moves by PSE to study the feasibility of putting up a commodities exchange, analysts said the trading of commodities like abaca and copra is more complicated than the stock market. "Commodity trading is a different kind of investment is riskier, more volatile, and more money is involved — different animal altogether," said Harry G. Liu of Summit Securities. Irving I. Ackerman of I. Ackerman & Co. said stock market veterans will more likely be the ones playing in the commodities exchange, since the general public would still be hesitant. 2TradeAsia.com’s Jason G. Lagrimas said PSE would have to entice even the small players to trade in a commodities exchange. "They need to educate people anew and inform them of risks in the commodities exchange." Analysts said that, unlike the stock market, a commodities market requires calculations on commodities’ future prices in a bid to make sure at least that they will not lose money. Analysts said this latest plan of the local exchange is a welcome move, although it would have been better if it focuses first on persuading more companies to list in the market and offering more issues to the public, before it starts diversifying. They noted that PSE already finds it hard to invite the public to invest in the stock market and the the bourse might find it more difficult to motivate people to invest in a commodities exchange. "The stock market itself is already confusing and intimidating [for the public]," Claire S. Quiray of Accord Capital Equities Corp. "Before anything else, PSE should first educate the brokers on how the commodities exchange would work, especially since there is limited knowledge on it," Ms. Quiray said. — Kristine Jane R. Liu, BusinessWorld